- >Financial Report
- >Consolidated financial statements Geberit Group
- >Notes to the consolidated financial statements
- >Note 18
In 2014, employees were able to purchase a limited number of shares at a discount of 45% (PY: 40%) compared to the market price (“Employee share purchase plan 2014”). Geberit management was entitled to draw the previous year’s variable remuneration partly or entirely in shares valued at market price (“Management share purchase plan 2014”). For each of these shares, management participants received one option (see part 2: “Option plans”). As part of the “Directors program 2014”, non-executive members of the Board of Directors received their compensation for 2013 in shares of Geberit AG at a discount of 0% (PY: 40%). All share plans are subject to blocking periods valid beyond the period of employment.
The share plans introduced in 2014 are summarized below:
|End of blocking period||Number of participants||Number of shares issued||Issuing price CHF|
|Employee share purchase plan 2014 (ESPP)||2016||1,845||20,687||155.07|
|Management share purchase plan 2014 (MSPP)||2017||70||13,320||281.95|
|Directors program 2014 (DSPP)||2018||6||3,505||281.95|
The 37,512 shares required for these plans were taken from the stock of treasury shares.
As of December 31, 2014, the Board of Directors, the Group Executive Board and the employees owned a combined total of 340,295 (PY: 338,788) shares, i.e. 0.9% (PY: 0.9%) of the share capital of Geberit AG.
The management has the opportunity to invest part or all of their variable remuneration in shares of the company through the management share purchase plan (MSPP). They may define a fixed number of shares to purchase, or a certain amount or a percentage of their variable remuneration to be invested in shares. in order to encourage management to participate in the program, a free option is provided for each share purchased through the program. These options are subject to a vesting period of four years: a quarter of the options can be exercised one year after the grant, a further quarter two years after the grant, a further quarter three years after the grant, and the remaining quarter four years after the grant.
In connection with an additional option plan (MSOP), the managing directors and members of the Group Executive Board are entitled to additional options. The options of the managing directors are subject to a vesting period of four years: a quarter of the options can be exercised one year after the grant, a further quarter two years after the grant, a further quarter three years after the grant, and the remaining quarter four years after the grant. The options of the members of the Group Executive Board are also subject to a vesting period of four years: a third of the options can be exercised two years after the grant, a further third can be exercised three years after the grant and the remaining third four years after the grant.
The exercise price of the options corresponds to the fair market value of the Geberit shares at the time of grant. The options have a term of seven years after which they expire. They can be exercised between the vesting date and the expiration date. The vesting of share options is subject to the achievement of a performance criterion - the average Return on Invested Capital (ROIC) - over the respective vesting period.
The following is a summary of the options allocated to the management in 2014:
|End of vesting period||Maturity||Number of participants||Number of options allocated||Exercise price CHF|
|Management share purchase plan 2014 (MSPP)||2015 - 2018||2021||70||13,320||281.95|
|Option plan 2014 (MSOP) / Group Executive Board||2016 - 2018||2021||5||64,647||281.95|
|Option plan 2014 (MSOP) / Other management||2015 - 2018||2021||64||62,428||281.95|
The fair value of the options granted in 2014 amounted to CHF 23.65 at the respective granting date. The fair value was determined using the binomial model for “American Style Call Options”.
The calculation model was based on the following parameters:
|Exercise price1||Expected volatility||Expected Ø dividend yield||Contractual period||Risk-free interest rate|
|Management share purchase plan 2014 (MSPP)||281.95||13.500||3.80||7||0.868|
|Option plan 2014 (MSOP)||281.95||13.500||3.80||7||0.868|
|1 The exercise price corresponds to the average price of Geberit shares for the period from 4. – 17.3.2014.|
The following table summarizes all option plans in place as of December 31, 2014:
|End of vesting period||Maturity||Number of options outstanding||Ø exercise price CHF||Number of options in the money||Ø exercise price CHF|
|Vested||2015 - 2017||30,847||208.06||30,847||208.06|
|2015||2016 - 2021||66,615||244.72||66,615||244.72|
|2016||2017 - 2021||100,838||241.58||100,838||241.58|
|2017||2018 - 2021||66,687||260.06||66,687||260.06|
The following movements took place in 2014 and 2013:
|MSOP||MSPP||Total 2014||Total 2013|
|Number of options||Ø exercise price||Number of options||Ø exercise price||Number of options||Ø exercise price||Number of options||Ø exercise price|
|Outstanding January 1||233,291||214.91||30,603||201.86||263,894||213.39||251,305||185.51|
|Outstanding December 31||274,455||248.26||28,460||245.33||302,915||247.98||263,894||213.39|
|Exercisable at December 31||22,433||211.59||8,414||198.65||30,847||208.06||29,509||184.88|
The 302,915 options outstanding represent 0.8% of the outstanding shares of Geberit AG. In principle, the Group hedges this exposure with treasury shares.
The options outstanding at December 31, 2014 had an exercise price of between CHF 189.10 and CHF 281.95 and an average remaining contractual life of 4.7 years.
Costs resulting from participation plans amounted to MCHF 2.9 in 2014 (PY: MCHF 2.6); those for option plans totaled MCHF 2.5 (PY: MCHF 2.6).